{"id":6053,"date":"2023-11-24T08:23:50","date_gmt":"2023-11-24T13:23:50","guid":{"rendered":"https:\/\/capitalbean.com\/?p=6053"},"modified":"2024-03-16T05:06:19","modified_gmt":"2024-03-16T09:06:19","slug":"what-is-the-cooling-off-period-for-payday-loans","status":"publish","type":"post","link":"https:\/\/capitalbean.com\/guides\/what-is-the-cooling-off-period-for-payday-loans\/","title":{"rendered":"What is The Cooling Off Period For Payday Loans?"},"content":{"rendered":"
Once you have repaid a payday loan, most lenders and US states have what is called a ‘cooling off period’ which is a period of one to seven days<\/strong> before you can take out another loan. This is something that is enforced by US law<\/a> and varies between US states.<\/p>\n The idea behind this is that people do not become reliant on high cost payday loans and have a moment to assess their financial situation and perhaps look at alternatives.<\/p>\n Whilst payday loans offer an effective way to borrow money fast<\/a>, they carry higher interest rates than the average financial product, with APRs typically around 200% to 400% APR depending on the state you are in and other factors such as your affordability and credit score.<\/p>\n Although it is common for American borrowers to habitually take out 5 to 6 payday loans per year,<\/a> this is not desirable and ideally you should be using these products for one-off emergencies and not something that can continue into a spiral of debt.<\/p>\n\n <\/p>\n <\/p>\n Yes, technically you can apply for a payday loan<\/a> straight after you have paid one off – and depending on how well you paid off the loan, you could be eligible to borrow a higher amount. Or equally, the lender may find that based on running some checks that you are more financially stretched and may only be able to borrow a smaller amount or your loan is declined.<\/p>\n However, something to bear in mind is that there will be a cooling off period of 1 to 7 days, depending on the US state you are in and the lender you are working with, so you may not be able to receive the loan for a few more days. This pause is designed to give you a moment to look at your financial position and avoid taking on extra high-cost debt which may not be helpful for you for your long-term. This would be a good opportunity to look at lower cost alternatives or speak to a professional.<\/p>\n <\/p>\n Whilst payday loans are very popular with more than 12 million Americans using them every year<\/a> and they certainly help people looking for emergency loans<\/a>, they are very expensive forms of credit and it is not recommended to use them over and over again.<\/p>\n With strong regulation in place, lenders across America have to follow any practices to help to protect consumers and stop borrowers from falling into long term debt cycles.<\/p>\n Therefore, it is intended that giving borrowers up to 7 days to evaluate their situation and their requirements, they may be able to seek cheaper alternatives or find more sustainable ways to borrow money.<\/p>\nKey Points<\/h2>\n
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Can I Take Out a Payday Loan Straight After Paying One Back?<\/h2>\n
Why Does a Cooling Period For Payday Loans Exist?<\/h2>\n